DEBT, FINANCING ARRANGEMENTS, AND LEASES

Long-Term Debt

Long-term debt, presented net of unamortized discount, consists of the following:



	December 31,
	2013		2012
	(Thousands of Dollars)
5.95% senior unsecured notes due 2017	$	184,790	$	184,726
6.05% senior unsecured notes due 2018	249,705		249,639
7% senior unsecured notes due 2016	174,864		174,809
7.125% unsecured debentures due 2025	84,865		84,853
Total long-term debt	$	694,224	$	694,027

As of December 31, 2013, cumulative maturities of outstanding long-term debt (at face value) for the next five years are as follows:



	(Thousands of Dollars)
2016: 7% senior unsecured notes	$	175,000
2017: 5.95% senior unsecured notes	185,000
2018: 6.05% senior unsecured notes	250,000
Total	$	610,000

In the second quarter of 2006, we entered into certain forward starting interest rate swaps prior to our issuance of fixed rate, long-term debt. The swaps, which were settled near the date of the June 2006 issuance of the 7% senior unsecured notes due 2016, hedged the variability of forecasted interest payments arising from changes in interest rates prior to the issuance of our fixed rate debt. The settlement resulted in a gain, recorded in Accumulated other comprehensive income, that is being amortized to reduce interest expense over the life of the related debt.

Restrictive Debt Covenants

At December 31, 2013, none of our debt instruments restrict the amount of distributions to our parent. Our debt agreements contain restrictions on our ability to incur secured debt beyond certain levels.

Credit Facility

In July 2013, WPZ amended its $2.4 billion credit facility to increase the aggregate commitments to $2.5 billion and extend the maturity date to July 31, 2018. The amended credit facility may also, under certain conditions, be increased up to an additional $500 million. Total letter of credit capacity available to WPZ under the $2.5 billion credit facility is $1.3 billion. At December 31, 2013, no letters of credit have been issued and no loans are outstanding under the credit facility. We may borrow up to $500 million under the amended credit facility to the extent not otherwise utilized by WPZ and Transcontinental Gas Pipe Line Company, LLC. At December 31, 2013, the full $500 million under the credit facility was available to us.

Under the credit facility, WPZ is required to maintain a ratio of debt to EBITDA (each as defined in the credit facility) that must be no greater than 5.0 to 1.00. For the fiscal quarter and the two following fiscal quarters in which one or more acquisitions for a total aggregate purchase price equal to or greater than $50 million has been executed, WPZ is required to maintain a ratio of debt to EBITDA of no greater than 5.5 to 1.00. At December 31, 2013, WPZ is in compliance with these financial covenants. For us, the ratio of debt to capitalization (defined as net worth plus debt) must be no greater than 65 percent. At December 31, 2013, we are in compliance with this financial covenant.

Each time funds are borrowed, the borrower may choose from two methods of calculating interest: a fluctuating base rate equal to Citibank N.A.’s alternate base rate plus an applicable margin, or a periodic fixed rate equal to London Interbank Offered Rate (LIBOR) plus an applicable margin. The borrower is required to pay a commitment fee (currently 0.20 percent) based on the unused portion of the credit facility. The applicable margin and the commitment fee are determined for each borrower by reference to a pricing schedule based on such borrower’s senior unsecured long-term debt ratings. The credit facility contains various covenants that limit, among other things, a borrower’s and its respective material subsidiaries’ ability to grant certain liens supporting indebtedness, a borrower’s ability to merge or consolidate, sell all or substantially all of its assets, enter into certain affiliate transactions, make certain distributions during an event of default, make investments and allow any material change in the nature of its business.

If an event of default with respect to a borrower occurs under the credit facility, the lenders will be able to terminate the commitments for all borrowers and accelerate the maturity of any loans of the defaulting borrower under the credit facility and exercise other rights and remedies.

WPZ participates in a commercial paper program, and WPZ management considers amounts outstanding under this program to be a reduction of available capacity under the credit facility. The program allows a maximum outstanding amount at any time of $2 billion of unsecured commercial paper notes. At December 31, 2013, WPZ had $225 million in outstanding commercial paper.

Leases

Our leasing arrangements include mostly premise and equipment leases that are classified as operating leases.

Effective October 1, 2009, we entered into an agreement to lease office space from a third party. The agreement has an initial term of approximately 10 years, with an option to renew for an additional 5 or 10 year term.

Following are the estimated future minimum annual rental payments required under operating leases, which have initial or remaining noncancelable lease terms in excess of one year:



	(Thousands of Dollars)
2014	$	2,344
2015	2,370
2016	2,396
2017	2,423
2018	2,449
Thereafter	2,463
Total	$	14,445

Operating lease rental expense, net of sublease revenues, amounted to $2.3 million, $2.2 million, and $2.4 million for 2013, 2012, and 2011, respectively.